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Five pension pitfalls women need to know about

Women are lagging behind when it comes to pension saving, risking poverty in old age. Here are some tips to get you back on track.


by Michelle McGagh on Jul 06, 2012 at 12:49

Effectively, through employer contribution and government tax relief you will have your 4% matched – doubling your contribution each month.

Dean said the concern was tha temployees did not understand that their contributions are boosted by the government and their employer. ‘If people do not understand [tax relief] then it is not a functioning incentive,’ she said. ‘We need to present it as matching – it’s simple and matching is very helpful, you put in 4% and your employer and the government will put in a combined 4%.’

Phillips added that people who failed to sign up to their company pension scheme, or opt out of auto-enrolment, were effectively giving up part of their salary package.

4. Don’t rely on your other half

A number of women forgo their own pension contributions in favour of keeping their partner’s pension topped up, but relying on your other half’s pension could prove detrimental.

Although many women say they will use their partner’s income in retirement, 61% of married couples only have a single life annuity, said Flood.

This means that when the husband or partner buys the annuity, it only covers them until they die, it does not cover their wife or partner. This means when the husband dies the wife is left with no income and may be forced to sell assets to survive.

As women tend to live longer than men, it is not a rare occurrence for a woman to be left without income. ‘There are people who have made that decision [to rely on their partner] and will find themselves without income,’ Flood said.

‘We are more independent and have our own careers and we are less reliant on partners to provide for us. We need to take responsibility for ourselves, but also need to talk to partners about how we use that money in retirement.’

5. Don’t put off saving

Women’s savings significantly trail that of men, but women should be saving more. The average life expectancy of a 65-year-old woman is 16 years, compared with 12 years for men, said Flood.

Dean said women should ‘make the most of the opportunities that auto-enrolment affords them’. Not only will saving help women live more comfortably in retirement, it will provide a sense of financial empowerment.

‘It is all about getting people to think about why tomorrow is worth saving for. It feels a long way off and too far away to think about today, but we want to put the future in the context of today,’ Dean said.

She added that saving a little will help people afford life’s little luxuries in retirement, and things that are important to them now. ‘We’re not thinking about big things, like cruises, but day-to-day thing that make a difference to your life, like going to the cinema or having a meal with family or friends.

‘People have to be brave…doing nothing is not an option.’

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13 comments so far. Why not have your say?

fc anderson

Jul 06, 2012 at 22:01

Fairly typical that there are no comments of any sort on the subject of women contributing to pensions. Somehow we must succeed in educating the female species that they must save & the earlier the better, to provide for themselves in old age.

Just a thought but perhaps the lack of the competitive gene in so many females is what blinds them to the need to save more & more early than men. Whilst there are some who would complain that women don't seem to earn enough, be aware that there are a lot more women now who DO earn the same as men if not more!

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Michael Stevens

Jul 07, 2012 at 19:54

Example. Many ladies are earning more than men.A lady is in government supported D.B. scheme and expect the rirement age to be 69 when she retires.Also it is the best savins scheme available as her contributions are so small copared to the TAX PayerThese should be incgeased considerable.

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Nigel Harris

Jul 08, 2012 at 10:28

Pensions are yet another wealth transfoer from men to women, not only for the state pension, but soon private pensions too. Women are given cheaper car insurance, yet pension providers will not give men better annuity rates, because although medical issues will be allowed to increase annuity rates, being a man who dies early will not. And when a man dies,his pension goes to his wife directly, or other women indirectly via the state. Women hold more votes than men, so government always panders to the whims of women.

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Keith Snell

Jul 08, 2012 at 11:16

This seems to blow a large hole in the female argument that more of them should be in the board room because they are more financialy prudent than men.

The fact we have so few men and women who bother to save for an adequate pension also suggests that our one man one vote system for voting is biased towards voting in financially incompetent governments for which we have more than adequete proof of already.

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Jul 08, 2012 at 11:38

So few women contributing to their own private pensions because the majority are probably banking on a man taking care of them in their old age.

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Jul 08, 2012 at 16:26

The figures given for life expectancy in the article are rather misleading. This is because a pension plan is brought with a view to income after retirement age. Now, of course, a proportion of pension plan holders do not survive to pension age, and thus should not be included in the count when considering the expected number of years after retirement.

The point of reference for a life expectancy calculation for assessing the benefit of a pension should always be taken from either the age at which the pension is first brought into payment, or, if it is already in payment from the current age of the pensioner.

Looking at this another way, men in general have a life expectancy well below 90 years of age. But someone who has attained the age of 90 and continues in good health will have an expectancy of several more years ahead of him.

If a retirement age of 65 is assumed, life expectancy for survival in retirement is about 21 years for a man and about 29 years for a woman.

However, note that many additional factors should be taken into consideration for assessing life expectancy. These include: obesity, healthy eating, smoking, drinking, exercise, coronary (and other ) disease history in family, previous medical history, current state of health, stress, and social environment.

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Rose G

Jul 09, 2012 at 09:26

Having bothered to save into an occupational pension and now having to contribute more for longer and receiving less than was originally predicted, why on earth would I save for a pension.

The pensions industry time and again have failed the people investing in them, there is no guarantee that your money invested in a pension scheme will actually be awarded to you in its entirety, with constant changes from government and equally poor performance of the funds.

You will note that pension fund managers, like their counterparts in the banking industry, seem to rather well whether or not they actually make money for their investors, while the investment funds themselves are likely to disappear into ether after charges are made against the fund.

The fiasco of world politics, together with the banking crisis, who in their right minds can trust any of those within the financial services?

Equitable Life investors were given no viable option when they lost out - it is a dog eat dog world within the financial services, who on earth can save with peace of mind.

It only benefits the investment banks & their chiefs, not the ordinary taxpayers or the pension investor.

Invest in something today, believing it will give you a good return for old age, and you will find this was all pie in the sky - it will be some other factor they had not considered or taken account off and back to raiding your pension savings - all political parties will drum up support for pensions plans, because instead of using the saving to build up the funds, the treasury has a finger in the pie, in how to spend money which should be ring fenced, but is not!

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Bob saxton

Jul 09, 2012 at 12:31

The provision for care costs will add enormously to the cost of living beyond retirement age. The unattractivness of care provision makes it an unacceptable option to many of us.

The stigma of suicide on ones name and family should be removed and the means of it be provided on the Health Service. The unselfishness of suicide making room and facilities available to the young,should be applauded. So should the saving to the Health Service.

The cost of a lethal dose of barbituates and a good drink to wash it down with would be less than £10.

It does not make sense for the state to pay out large sums of money to impose years of pain, neglect and lonlyness on old people.

Bob the seventyfive year old electrician

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Jul 09, 2012 at 18:35

Well said, Bob!

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Jul 09, 2012 at 21:07


I hope that your message does not indicate any personal sense of despair. If you are still blogging away, then surely life cannot be all bad?!

The purely moral arguments for and against euthanasia are well known, and will not be rehearsed here.

But you do touch on a very difficult question. Should the old make way for the young? We live on a planet on which the eco-systems, upon which we depend, are being overwhelmed by the increasing pressure of human population. Mankind's worst enemy is turning out to be mankind itself.

The very concepts which lie at the heart of Western civilization threaten to accelerate the destruction of 'space ship earth' as a suitable host for mankind. And no other host exists. Respect for equality of rights, food for the hungry, economic development, improved healthcare, improvements to the quality of life, and globalization of markets and culture, all these serve to increase the pressure on terrestrial resources and bring closer the eventual end of human life on earth. We are not here for ever. The entire history of mankind is only a short episode in the history of the earth.

What are the answers to the contradictions between universal interests, group interests, and the interests of the individual? We have no answers, and it appears that humanity is condemned to a reckless course in which some groups will enhance their survival prospects at the expense of others.

Anyhow Bob, keep blogging or you will never know the end of the story. I shall keep an eye out for your thoughts in a few years time, perhaps from Bob the eighty- five year old electrician? Keep it up sparks!

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Jul 09, 2012 at 21:16

Rose G

The Equitable was a particular tragedy. A mutual society, the oldest assurance company in the world, the first to use actuarial principles and assess risk on a mathematical basis, was brought down by a failure to apply those same principles in a consistent manner. The executive introduced polices to insure against systemic risks without realising that those risks exposed the entire business and thus could not be insured within the resources of the society. A disaster of incompetence in policy design and risk management. There was more foolishness too, and the Board members, a typical British board of worthies, failed to engage with the detail of the business having apparently neither the wit nor the application needed to recognise and rectify the problems. However, you should not allow this sad example to justify not providing for a pension. Even the Equitable policyholders did get pensions, just not as much as they had expected!

There is no possible guarantee against systemic change affecting pension savings. But some pension saving provision is worthwhile none-the-less. The World, generally as we know it now, may remain viable for the pensioner's lifespan, In which case, any amount of savings that the pensioner has made prior to retirement should ease his/her lot in retirement, even if it falls short of the salesman's promises!

Not only that but, by diverting money into long term savings in place of immediate consumption the pressure on the World's natural resources is a little diminished, so saving for a pension may be good for the planet!

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Rob Walker

Jul 09, 2012 at 21:55

Sleepwalking into old-age poverty eh? I am not sexist (really!) but I know of enough divorces amongst my mates to know that most women come away from a marriage with a healthy slice of their ex's pension, or compensation in lieu. Those that stay married enjoy a slice of their husband's pension when / if he dies. So that leaves single women who stay single. Nowhere in this article does it say that they save less in their pension than single men. So where is the story ?? These anxiety-driven sales pitches from Prudential et al are really crass and unimaginative. If you really want to con single women into spending more money on pension products then tell them what they might be missing in old-age, and if you can't, then shut up!

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Bob saxton

Jul 10, 2012 at 11:28


Thank you for kind words. I would like to assure you that my life is pleasant and rewarding now. However I have a genuine fear of what will happen when ,inevitably, a point is arrived at when this is no longer so. Tthe cost of care could easily use up the assets that I would like to pass on to my children and grandchildren. Adequate state provision for my care, and the ever increasing numbers of my contemporaries when we are mentally and physically incapacitated cannot possibly be affordable. As I see it this presents two alternatives, the current one of inadequate care, neglect and sustained misery and avoiding this by providing the means of terminating it.

There is, of course my third alternative, suicide. This is problematical when increasing incompacity may take the matter out of your own hands.

Bob the seventy five five year ol electrician

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